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Refinancing Your Adjustable-Rate Mortgage (ARM) with O1ne Mortgage

Are you considering refinancing your adjustable-rate mortgage (ARM)? At O1ne Mortgage, we understand the complexities and benefits of refinancing, and we’re here to guide you through the process. Whether you’re looking to lock in a fixed rate or take advantage of better terms, refinancing can be a smart financial move. Call us today at 213-732-3074 to discuss your mortgage needs.

Is It Possible to Refinance an Adjustable-Rate Mortgage?

Yes, you can refinance an adjustable-rate mortgage (ARM) just like any other type of mortgage. Refinancing allows you to replace your current ARM with a new mortgage, potentially securing a lower interest rate or switching to a fixed-rate loan. This can be particularly appealing if you’re concerned about future rate increases.

When to Consider Refinancing an ARM

Refinancing an ARM can be beneficial in several scenarios:

• Qualify for better rates: If your credit scores have improved or you can afford a larger down payment, you might qualify for a lower interest rate.
• Switch to a fixed-rate loan: Refinancing to a fixed-rate mortgage can eliminate the risk of your interest rate and monthly payment increasing.
• Change your repayment term: Opting for a shorter or longer-term loan can affect your interest rate and monthly payment.
• Eliminate mortgage insurance: If you have at least 20% equity in your home, you might be able to refinance without mortgage insurance, reducing your monthly payments.

How Much Does Refinancing an ARM Cost?

While refinancing can offer financial benefits, it’s important to consider the associated costs:

• Closing costs: These can range from 2% to 5% of the loan’s balance. Some mortgages advertise no closing costs, but they may have higher interest rates or roll the costs into your loan amount.
• Prepayment penalties: Some ARMs have prepayment penalties, which could cost you thousands of dollars. Review your loan’s terms carefully to understand any potential penalties.

How to Refinance an Adjustable-Rate Mortgage

Follow these steps to explore refinancing your ARM:

1. Check your credit: Your credit scores impact your eligibility and the interest rates you receive. You can check your FICO® Score for free from Experian.
2. Calculate your target loan offer: Consider closing costs, your mortgage balance, interest rate, remaining term, and prepayment penalties to determine what rates and terms would make refinancing worthwhile.
3. Get prequalified or preapproved: Start shopping for mortgages to see if you’ll qualify for an offer in your target range. Prequalification gives a rough idea, while preapproval provides more precise loan offers.
4. Review the loan offers: Look over the prequalification or preapproval offers to see if refinancing makes sense. Pay attention to the fine print, not just the interest rate and repayment term.
5. Submit the application: If refinancing makes sense, complete the application with the lender that gives you the best offer. Closing on your new loan might take around four to six weeks.
6. Make it official: Sign your new loan agreement to complete the refinancing. Your new lender will pay off your old loan, and you’ll start making payments to your new loan servicer.

Monitor Your Credit if You’re Thinking About Refinancing

Monitoring and improving your credit can be crucial when refinancing your mortgage. Avoid applying for other credit accounts to prevent lowering your score, and focus on paying down credit card balances to lower your credit utilization rate. You can track your progress with free credit report and score monitoring from Experian.

At O1ne Mortgage, we’re committed to helping you navigate the refinancing process with ease. Our team of experts is ready to assist you in finding the best mortgage solution for your needs. Call us today at 213-732-3074 to get started on your refinancing journey.

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